McDonald's sales up globally, despite fewer US customers

McDonald says modern stores, delivery are bringing in more customers worldwide

CHICAGO -- McDonald's says modernized stores and growth in delivery helped bring in more customers globally last year, but lower store traffic in the U.S. remains a concern.

Easterbrook said the company hopes to reverse that with breakfast value menus, more coffee promotions and personalized deals for customers using its mobile ordering system. Making sure drive-thru service is meeting demand is also a priority, he said.

One way to ensure repeat customer visits, Easterbrook said, is store improvements. McDonald's says half its restaurants globally have now been converted to a modern design that includes digital ordering kiosks, table service and curbside pickup for mobile orders. In the U.S., 4,500 of McDonald's 14,000 restaurants have been redesigned; 2,000 more are scheduled to be redesigned in 2019.

The redesigns have caused some problems with U.S. franchisees, who have complained about the high cost and the time it takes to complete them. McDonald's, which is paying 55 percent of the cost for the redesigns, spent $1.4 billion on U.S. renovation costs in 2018 alone, and expects to spend nearly $1 billion this year.

As a result, McDonald's is allowing franchisees to delay the redesigns until 2022, in exchange for a lower contribution of 40 percent of costs. But the company said Wednesday it expects most U.S. restaurants to complete the renovations by 2020.

"Collectively we remain committed to the growth strategy," said Easterbrook, who met with franchisees to hear their concerns throughout the quarter.

McDonald's plans to open 1,200 new restaurants globally in 2019. Nearly half of those will be in China.

For the fourth quarter, McDonald's reported earnings of $1.42 billion, or $1.82 per share. Adjusted for one-time gains and costs, that came to $1.97 per share, which is 7 cents better than industry analysts had expected, according to a poll by Zacks Investment Research.

Fourth-quarter revenue was down 3 percent to $5.16 billion, matching forecasts. Revenue was expected to fall as McDonald's puts some company-owned stores back in the hands of franchisees. Around 90 percent of the company's stores globally are run by franchisees; McDonald's wants to bring that to 95 percent.

McDonald's shares were flat at $182.68 in early afternoon trading.

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Portions of this story were generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on MCD at https://www.zacks.com/ap/MCD

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